EcoGraf : Quarterly Activities and Cashflow Report March 2022

E N G I N E E R I N G C L E A N E N E R G Y

29 APRIL 2022

ASX: EGR

QUARTERLY ACTIVITIES REPORT

AUSTRALIAN GOVERNMENT CONDITIONALLY APPROVES US$40M

EXPANSION LOAN FOR HFFREE BATTERY ANODE MATERIAL FACILITY

EcoGraf Limited ("EcoGraf" or "the Company") (ASX: EGR) is pleased to release its activities and cash flow reports for the three months ended 31 March 2022.

HIGHLIGHTS

• EcoGraf™ Battery Anode Material
• • Australian Government announces conditional approval for EcoGraf US$40m expansion loan to support the Company's HFfree Battery Anode Material Facility
  • Construction program advancing with submission of regulatory approval proposals and preparation for commencement of initial site works and installation of underground site services
  • WA site lease agreement with State Government land agency DevelopmentWA in place for execution once approvals secured
  • Finalising contractual arrangements for award of construction engineering and key process equipment procurement programs
  • Additional process refinements identified from the commercial scale mechanical shaping program expected to deliver increased product yields of over 60%
  • EcoGraf™ HFfree process optimisation results indicate reduced consumption of reagents and improved operating efficiencies
  • Discussions with prospective customers in Asia, Europe and North America in relation to offtake, investment and product development opportunities
  • New Australian facility flowsheet configured to maximise product yields and allow value-adding of by-products to capitalise on new product market opportunities
• EcoGraf™ Battery Recycling
• • Increased industry focus on closed loop battery supply chains and anode recycling
  • EcoGraf™ HFfree recovered anode material undergoing electrochemical testing with SungEel Hitech in Korea
  • Engagement of European anode recycling specialist as discussions progress with potential partners
• EcoGraf™ Natural Flake Graphite
• • Government recognition for Epanko at annual Tanzanian mining and investment conference
  • Funding program advancing with multiple financial institutions undertaking due diligence
  • Social and community programs supporting the local hospital, village medical services, orphanage and Ulanga's International Women's Day celebrations
  • Partnership with Vemeer South Africa to investigate low impact surface mining opportunities
• Corporate
• • Cash at end of quarter of $48.1 million
  • EcoGraf included in All Ordinaries Index from 21 March 2022
  • DTC eligibility granted for trading of EcoGraf shares on the OTCQX market in the US

EcoGraf Limited	ABN: 15 117 330 757	Managing Director
18 Richardson Street	E: [e-mail]	Andrew Spinks
West Perth WA 6005	www.ecograf.com.au	T: [phone]

BUSINESS SUMMARY

EcoGraf is building an integrated battery anode material business to produce high purity graphite products for the lithium-ion battery and advanced manufacturing markets. Over US$30 million has been invested to date to create two highly attractive, development ready graphite businesses.

The first new state-of-the-artEcoGraf processing facility in Western Australia will manufacture spherical graphite products for export to Asia, Europe and North America using a superior, environmentally responsible HFfree purification technology to provide customers with sustainably produced high performance battery anode material. Additional battery graphite processing facilities are in planning for Europe, Asia and North America to support the global transition to clean, renewable energy and the rapid growth in demand for battery materials.

In addition, the Company's breakthrough recovery of carbon anode material from recycled batteries using its EcoGraf™ HFfree process assists electric vehicle and lithium-ion battery manufacturers to reduce waste and use recycled carbon anode material to achieve closed-loop operating efficiencies.

To support these battery graphite operations, the Company is arranging project funding for the development ready TanzGraphite natural flake graphite business in Tanzania to provide additional feedstock for the battery anode material facilities and supply industrial customers in Europe and Asia with high quality graphite products for refractories, recarburisers and lubricants.

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QUARTERLY ACTIVITY UPDATE

ECOGRAF™ BATTERY ANODE MATERIAL BUSINESS

The Company's first EcoGraf™ Battery Anode Material Facility is located in the Kwinana-Rockingham Strategic Industrial Zone near the capital city of Perth in Western Australia and will be the first of its kind to be constructed outside of China, providing a new supply of sustainably produced, high quality and cost competitive purified spherical graphite for the high growth lithium-ion battery market.

This new state-of-the-art development has received significant endorsement and support from Federal and State Governments through conditional loan funding under the A$2 billion Australian Government Critical Minerals Facility, the granting of Australian Major Project Status and the award of Lead Agency status by the Western Australian Government.

EcoGraf is actively working with the Australian Critical Minerals Facilitation Office, the Major Projects Facilitation Agency, Austrade, Export Finance Australia and the Western Australian Department of Jobs, Tourism, Science and Innovation to develop the new facility and support Australia's future in the global lithium-ion battery industry.

Construction Program

Development and Works Approvals were submitted in January 2022 for the construction and operation of the EcoGraf™ HFfree Battery Anode Material Facility and were followed by a public consultation period conducted by the City of Rockingham that ended on 25 March 2022.

The land is located in an established industrial precinct that's been designated as a priority zone for the development of a globally leading battery minerals processing centre and is being leased to the Company by the State Government land agency DevelopmentWA.

Approvals submissions are supported detailed environmental, health and safety, building design, site infrastructure and offsite services studies completed by independent industry experts with extensive experience in undertaking similar processes in the Kwinana-Rockingham Strategic Industrial Area.

Preparations have commenced for undertaking initial site works comprising earthworks, pads, drainage facilities, access roads and installation of underground electrical, gas, water and sewerage services. As part of this phase, EcoGraf has appointed global consultancy Turner & Townsend International to assist with the execution of the project implementation program.

Turner & Townsend International are a recognised leader in working with clients to successfully deliver capital projects and are also advising EcoGraf on its international expansion strategy for additional battery anode material facilities.

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Contractual arrangements are being finalised for the award of the construction engineering and key process infrastructure procurement programs, with the optimised layout and design of the new EcoGraf™ facility expected to minimise the on-site construction schedule to achieve operational commissioning in 1H 2023 and to facilitate modular expansion to increase production to 20,000 tonnes per annum.

The plant design allows flexibility for producing both standard 16µm (micron) and premium super-fine 10µm (micron) HFfree battery anode material products, with additional refinements adopted from the commercial scale mechanical shaping program expected to deliver industry leading product yields of over 60%. EcoGraf has also incorporated provisioning in the layout to enable the future installation of process equipment for value-adding of by-products, to capitalise on new product market opportunities for its recarburizer, cathode enhancer and high purity fines by-products.

To support the Company's zero-waste operating strategy, GHD Group has been engaged to evaluate opportunities to maximise the recovery and recycling of process streams in the purification process and to minimise off-site discharges by producing re-usable waste materials.

Activities to tender and award supply contracts for power, water, gas and reagents are in progress with all operational supplies expected to be sourced from within the Kwinana-

Rockingham Strategic Industrial Area.

The region is rapidly emerging as a globally significant centre for battery

minerals processing,

supported by clean

hydrogen development plans, innovative research and downstream processing.

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Development Funding

The Commonwealth of Australia has conditionally approved a loan of up to US$40 million under the A$2 billion Australian Government Critical Minerals Facility, to support the planned expansion of the Company's Australian Battery Anode Material Facility to 20,000tpa.

The A$2 billion Critical Minerals Facility was announced by the Australian Government on 28 September 2021 and is managed by Export Finance Australia. Its objective is to help secure the vital supplies of resources needed to drive the new energy economy and support the resources jobs of the future. Further information is available at: https://www.pm.gov.au/media/backing-australias-critical-minerals-sector.

Export Finance Australia has advised the Company that it's received conditional approval from the Australian Government to make available a loan of up to US$40m to assist EcoGraf undertake the planned expansion of its Australian Battery Anode Material Facility.

The proposed loan is subject to a number of conditions relating to completion of all due diligence to the satisfaction of Export Finance Australia, the successful construction and commissioning of the initial 5,000tpa facility and the execution of material agreements for the expansion construction, operations and sales arrangements. These conditions are customary for project financings of this nature, or otherwise required under the Critical Minerals Facility.

EcoGraf has appointed financial advisors to coordinate the remaining due diligence activities with Export Finance Australia to enable the parties to execute binding agreements for the loan.

The Federal Government is also supporting Australian manufacturing through a A$1.3 billion Modern Manufacturing Initiative that provides grant funding to assist Australian manufacturers scale-up, collaborate and increase their competitiveness. The new Australian Battery Anode Material Facility aligns with the priorities identified for this initiative and EcoGraf has submitted an application under the current Manufacturing Translation Stream - Resources Technology and Critical Minerals Processing Priority funding round.

Product Sales

EcoGraf has entered into a non-binding Memorandum of Understanding with POSCO, a multinational industrial company headquartered in South Korea and a leading manufacturer of lithium-ion battery cathodes and anodes.

Under the agreement, the parties will work together in relation to EcoGraf supporting POSCO's anode production expansion plans through the supply of EcoGraf™ HFfree battery anode material products, as well as evaluate other opportunities for co-operation on product development, battery anode recycling and the development of EcoGraf's battery anode material business. EcoGraf and POSCO are continuing discussions in relation to the arrangements for cooperation in their respective businesses.

There's been a significant increase in interest from potential customers and partners in 2022 with a greater focus among industry participants on securing battery anode material and the development of regionalised battery production facilities. EcoGraf is ideally placed to support these parties through its environmentally superior, high quality battery anode material products, with discussions, product testing and due diligence processes continuing.

EcoGraf™ HFfree Patent and Trademarks

Since developing the proprietary EcoGraf™ HFfree purification technology in 2017, the Company has sought to protect its intellectual property assets through patents and trademarks. On 8 November 2021 the Company reported that the International Preliminary Examining Authority of the Patent Co-operation Treaty has deemed all 25 of the EcoGraf™ purification process patent claims as novel and inventive.

Based on this positive examination and finding, in December 2021 the Australian Government, through IP Australia, confirmed acceptance of the Company's patent application for its unique EcoGraf™ HFfree purification technology.

The purification technology was first developed by EcoGraf in Australia and has been refined through extensive testing and analysis conducted over the last seven years in Europe and Asia. Development of the novel and innovative process has been supported by the Government through its AusIndustry R&D Tax Incentive program.

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